A landmark federal labor ruling on Thursday vastly expanded the definition of corporate employee and could end the arms-length relationship that companies like McDonald's have historically had with their franchisees' employees.

With its ruling in a case involving Browning-Ferris Industries and employees at one of its subcontractors, the National Labor Relations Board redefined what it means to be a "joint employer." The new standard is significant because corporations could be held liable for labor law violations by their subcontractors and could be forced to the bargaining table by unions seeking to organize the employees of a subcontractor or franchisee.

Business groups blasted the 3-2 ruling, calling it a "seismic shift" in the employer definition that could significantly alter the face of American businesses, while unions hailed a victory.

Wilma Liebman, a former NLRB chairwoman, said the decision is a win for workers because it expands the universe of companies that can be considered joint employers and a home run for unions that pushed for the joint-employer standard to be expanded. "The employer can't say 'It's the subcontractor's responsibility,'" she said.

The far-reaching implications of the decision stem from a 2013 election petition by the Teamsters union, which sought to represent workers at a Browning-Ferris recycling facility in Milpitas, Calif. The workers were employed by Leadpoint Business Services, a subcontractor, to sort out recyclable items and clean the facility.

The petition triggered the question of whether Browning-Ferris and Leadpoint were joint employers. An NLRB regional director found that they were not joint employers because they did not share direct and immediate control over conditions of employment, such as hiring, firing and disciplining workers.

The union appealed the decision, which led to the five-member national board decision on Thursday. The ruling means that ballots cast in a union election will now be unsealed and counted.

Experts say the case will eventually be appealed and could reach the Supreme Court.

The ruling could have immediate ramifications for staffing agencies and companies that hire them, and cause a scramble as businesses seek to maintain the status quo through legislation and labor groups rally to push causes that include the Fight for $15 campaign.

International Franchise Association President Steve Caldeira criticized the ruling as a "tortured analysis" that will hurt small businesses and said the association and its allies will continue to ask Congress to intervene in preserving the established joint-employer standard.

The National Retail Federation said the decision unnecessarily blurs the distinctions between independent parties in a wide range of normal business-to-business relationships like franchising or subcontracting.

In its decision, the board said that the old standard no longer kept pace with the current workforce, where the diversity of arrangements has significantly expanded. For example, in 2014, 2.87 million workers were employed through temporary agencies, compared with 1.1 million in 1990.

The board's majority said it has a responsibility to adapt the standard to "encompass the full range of employment relationships."

Under its former standard, a company was considered a joint employer if it had direct and immediate control over working conditions. In the new standard, a company is a joint employer if it exercises indirect control over working conditions or if it reserves the authority to do so.

Alex Barbour, a Chicago-based labor law attorney at Cozen O'Connor who usually represents employers, noted that the board didn't say how much indirect control must exist to establish a joint-employer relationship. "It's going to keep the parties simply guessing without really knowing," he said.

In their dissent, Republican board members Philip Miscimarra and Harry Johnson said that the majority creates a joint-employer test under which "there can be no certainty or predictability regarding the identity of the employer."

The board's Democratic majority, however, said that it "cannot attempt today to articulate every fact and circumstance that could define the contours of a joint employment relationship." And that when questions arise over a particular relationship, those issues will be best examined and resolved individually, it said.

Unions — including the Service Employees International Union, which is funding the Fight for $15 campaign — have been the main force behind the push to broaden the joint-employer standard at the NLRB and other federal agencies. They've filed lawsuits related to the issue in federal courts and have won some battles along the way.

Two years ago, for example, a California federal judge found Wal-Mart shared responsibility for warehouse workers employed by a staffing agency hired by a Wal-Mart subcontractor. The ruling allowed the warehouse workers to name Wal-Mart as a defendant in a lawsuit.

The joint-employer issue gained momentum last year when the NLRB's general counsel issued complaints against McDonald's and its franchisees as joint employers without explicitly defining his reasons for that decision. The burger giant and its franchisees are accused of violating labor law and retaliating against workers who participated in demonstrations demanding $15 per hour wages and a union.

Labor law experts say the board's new joint-employer standard strengthens the general counsel's case against McDonald's.

"McDonald's is the boss — that's true by any standard," Kendall Fells, organizing director of Fight for $15, said in a statement. "The company controls everything from the speed of the drive-thru to the way workers fold customers' bags. It's common sense that McDonald's should be held accountable for the rights of workers at its franchised stores."

McDonald's said in a statement that the ruling pertains to Browning-Ferris and its subcontractors, not McDonald's. "At McDonald's, we do not direct or co-determine the hiring, firing, wage rates, hours, or any other terms of employment of our franchisees' employees – which are the well-established criteria governing the definition of a 'joint employer,'" said an emailed statement from McDonald's spokeswoman Lisa McComb.

Richard Adams, a California-based consultant for McDonald's franchisees, said the decision flies in the face of the franchise model, which relies on franchisees' ability to oversee their own employees. It also makes the employer company "the deep pockets" in terms of liability, he said.